Extreme Betting

Abstract

AbstractIt is often thought that bets on the truth of known propositions become irrational if the losing costs are high enough. This is typically taken to count against the view that knowledge involves assigning credence 1. I argue that the irrationality of such extreme bets can be explained by considering the interactions between the agent and the bookmaker. More specifically, the agent’s epistemic perspective is altered by the fact that the bookmaker proposes that unusual type of bet. Among other things, being willing to offer a bet with unnecessarily harmful losing costs is likely to undermine the baseline level of trustworthiness required for it to be rational to engage in betting exchanges. This sort of explanation does not require granting either that we assign credence lower than 1 to known propositions or that knowledge is sensitive to practical stakes. Moreover, I show that, in our ordinary lives, we frequently perform actions that we know would be disastrous if certain conditions did not obtain. This behaviour can be seen as a form of implicit extreme betting and, nevertheless, it is often rational.